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tv   Mad Money  CNBC  October 2, 2012 6:00pm-7:00pm EDT

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>> through the xly. >> thank you for watching. see you tomorrow. back here for more fast money. in the meantime "mad money" with jim cramer starts right now. >> they are nuts. they know nothing. >> "mad money." you can't afford to miss it. >> may i'm cramer, welcome to cramerica. my job is to coach and teach you. call me. we are told that when the car met is up this much, good things are supposed to happen. s&p edged up and nasdaq gained 2.1% thank you apple and bell. we hear stories that october is rarely down.
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you are supposed to buy stocks and all of this nonnonsense. here is what you need to know. all of these patterns, they are worthless. they are inconclusive at best and in short they are a total waste of time and tonight you are going to learn why. you probably ask me why did we spend so much time talking about them? >> i don't talk about them on "mad money." no, i know better. people talk about this garbage, it is great for grabbing people's attention. a very necover of authenticity. this is a big one. let's see, in the first tuesday in the first month of a new
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quarter we have been up 1.2% unless it was a friday. when you seem so authoritative people are going to bite. buy buy buy. this data captures the imagination of the editors of the books. as pattern recognition is supposed to make people a lot of moolah, but it doesn't. i call these patterns lovy blankets. something that makes you feel more secure. it couldn't protect you from anything. why am i so dismissive of these stats? >> when i used to trade i would regard going against it as tempting fate. a lot of that judgement is
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something that happened in the crash of 1987. i did that for years. the trouble with this analysis is it works right up until it stops working. october is just on the calendar. but i bring this up, in a few days i'm sure you will hear that history could repeat itself. this thinking, some of you might sell stocks because we have an, anniversary. i want you to make decisions based on the companies that you owned. and then the impressionist factors. the feds attempt to jump start the economy by any means necessary. think about how the people might have sold in october last year. why doesn't this calendar style of investing interest me to make money?
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simple. every year there is a way to make money. let me give you examples of why this is a lazy force that is nothing but a lovy blanket. first, when these numbers or patterns were created, the u.s. was in control of its own destiny. our fings ago system is connected with theirs. do you think any of the historical data takes on that shift that we have to deal with? no, do you think i would be ringing a gong five years ago? i think this is kind of a recent event you know. gong show. i cannot recall another time when the federal reserve is taking the step to lower the -- if the economy gets better. that means you have to lower stocks.
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history shows it has to be one. of course it didn't pay to sell those stocks in september. september is the worst month for investing. third, there is apple. we've never had a $600 billion stock before. we've never had a stock that is so much bigger. if i could see a stat that says on the third thursday of every month ending with the letter r we have been higher? i would say wait a second. the only thing was that you were supposed to eat oissters in that month. the banks used to be a reasonable place to invest. these days book values are meaningless. wi banks you have the justice department and the state attorney's general. how is that?
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show me another time when we had a set of circumstances and i'll show you how that group acted. as for tech, the personal computer was the backbone of the group. history is worthless as the guide. finally, i'm aware of any studies based on the calendar, today on fast money an unbelievable show i watched mark cuban talk about the trading and how it has drive ven the trader out of the market. we could have radical crashes caused by the machines that rec any previous patterns. inned end, what steams me about the stack market science, is the false sense of security.
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as we got through the difficult month of september and now we are fine. that is really helpful. until it turns bad, here is the bottom line, the problem with these patterns is that they help until they don't. they give you comfort until there is no reason for it. my advice, ignore the calendar, do the homehomework. a broken stock clock, write twice a day. bill, here is bill. >> cramer from ohio the football hall-of-fame. >> number two belongs but he never made a super bowl so go ahead. >> talking about mpc a company that is poised to take advantage of opportunity crews. >> what do you think? >> i agree. i think it is a terrific
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situation. they he don't understand about the balkin and the eagle firm. and mpc is a winner in that situation and not a loser. let's go to robyn in california. >> hi, jim. booyah i read that arising christmas shopping is expected this year. mattel or other kid oriented stocks, whether they rise during the holiday season and ba what you think they will do this year. >> the toy cohort did not have a good back to school season. mattel would be the one that i like. it has a 3.5% yield. the forecasts about holiday season, they are based on nothing. that is total thumb sucking. whatever anyway, use the
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calendar to remind you when your anniversary is. not for investing. anyway, wow, try looking at the fundamentals, not your desk calendar. stay with cramer. >> coming up cash crop? the midwest crop sent shares up to 52 week highs. after failed earnings should you be harvesting your gains or doubling down? cramer talks to the ceo next. >> and later, wall street is at war and when the analysts disagree it is your time to make "mad money." cramer is giving you a price check on costco. real estate stocks have been soaring.
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tonight cramer turns to the technicals to see if they are built to go higher or if they are no longer stable. all coming up on "mad money." i'm bara ck o bama and i approve i'm bara this message. ck o romney: "it's time to stand up to the cheaters"
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we practice buying homework not buying whole. people are eating diets with more and more meat which requiring more grain. that is a huge trend but itself
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it is not enough to own the stocks at any given moment. like i told you last friday, the fertilizer plays are real wild traders. mosaic sells two of three primary crop nutrients. now mosaic has run up in the mid 40s. to more than $60 that sent crop prices up. and revenues that fell 18.7%. the problem, management indicated that demand for their products pays to deliver and they said they expect better distribution. so what should we make of this quarter? let's talk to jim the president and ceo of mosaic company.
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welcome to "mad money." >> oh thank you for having us on the show, jim. >> i want to start with the long-term. because the long-term is so important. we have a situation that wants to get better diet. that means where is mosaic positioned in the longer world food chain in this world. we are seeing more people to feed every year. that is hardless of what is happening in the country or in the world. there is one way to provide more food in the world. that is the farms having greater yield. the fastest way to have better yields is for better economics. >> what i think people will say is wait a second. i played this group.
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remarkable call and remarkable slide prescriptientation thank . something is wrong with them, the world changed right, that is what changed? >> nothing is wrong with mosaic. what has changed is the world's appetite for risk. we are seeing dealers, prices ran up and people are reluctant to position product into their warehouses. there is no doubt that farmers are going to plant for maximum yields. it is a matter of timing. but when they are and it is much closer to the seeding time or fertilizer time they will be applying it in good volumes. big population growth and a
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middle classification of both countries. yet those were not stronger markets. >> they weren't stronger markets for a couple of reasons. india, they heavy subsidized farmers. they were reduzing subsidies for farmers. prices are going to be higher. they have been subsidizing farmers for years. they are making good returns. in china different story. they have built the inventories and they are able to ride that cushion and probably into the new year before they start buying. we are seeing the emergence of malaysia and demand starting to grow and they are filling in the holes that are left. yoo o
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>> run of the reasons that the stock went down, they said that there were one time problems involving hurricane isaac and river volumes and rock that need to come from florida. you solved problems or they went away. and the set up of the stock being down doesn't take into account that you may not have any of those problems. >> that is it. those are transient problems. we are not going to likely have weather disruptions. mississippi river. low rates. that is going to pose some problems but it is going to start raining again this fall. it will start again this year and the mississippi will rise and we will find ways to work around. we have trucks, rail and we can get the product to customers. and those things happen. this is an asset and a lot of
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processes involved. we had a couple of surprised and we dealt with them and we are going to see higher operating costs. >> one of the things threw me in. copply cated story. mr. lawrence, strang whorner sad that i google ammonia and largely methane. he said that is likely to go up strongly in the second quarter. i was surprised at that. >> that was larry our cfo. he was referring to ammonia prices which are largy dry ve do natural gas. it is from natural gas. depending on your view of natural gas prices going forward
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that is driving the price of ammonia. we are going to have it as stable but the demand has been very, very strong. 700 tons, much of that comes from the caribbean or from eastern europe. the rushians are setting the price $8, or $7 gas price. we are going to see a boom in ammonia plant construction while 10 million tons has been announced. and it will correct, we will see lower ammonia prices and in our case, that could be sooner rather than later. we usually pass that through as a cost to the phosphate production. it will pass through rapidly to the end user. it seems like last year, when
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the cash expires in may, when you begin to buyback stock it could be a terrific year for you. >> you are right. we have $3.6 billion of cash and only $1 billion of debt. we are well positioned. what we are working to do is maintain our flexibility for the may 2013 expedition. and just over a year ago. we have in the meantime increased our dividend by 25 cents a share last december to where it is now $1 a share. so we have been returning cash to the shareholders as well as having the flexibility for the expiration. we want to have a good cushion
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for cash and take advantage of the opportunity. >> thank you jim. >> that is jim president and ceo of the mosaic company. >> thank you, jim. >> guys, look, short-term. longer term, you know who i feel about the agricultural stocks. i think they are going to be lull iss bullish. after the break i will try to make them more money. >> coming up. call street is at war over the future of one retail giant. and when the analysts disagree. it is your time to make "mad money." tonight cramer is giving you a price check on costco. >> and later seller's market. real estate stocks have been soaring. tonight cramer turns to the
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technicals. on a new edition of off the charts coming up on "mad money." accolade overdrive. zagat just gave hertz its top rating in 15 categories, including best overall car rental. so elevate your next car rental experience with the best. it's just another way you'll be traveling at the speed of hertz.
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rather expensive stock thanks to a fabulous run. what should we do with the stock of costco? two well republicaned research firms that could be disagree we got all the ingredients. two analysts enter only one leaves. situation. raising prize objectives to $110. premium multiple warranted. you are not overpaying. were they arguing that the stock is over priced? >> given the fact that they are trading. the very next day in the other
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guy's face. bernstein research. summertime rally. but is there an october surprise in the store? bernstein believes that it could be few rich if the estimates are too high? who is right? the bullish bank of america or the the bernstein bears. bank of america already had it as a buy. these were both pieces where the analysts reaffirmed their positions. they have been behind costco for years as i have and they nailed the recent rally. they have been fighting the move all year and have kept you out of the monster really.
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however, just because they have been right doesn't mean they are going to keep being right. i'm a costco guy. for the most, i have to tell you, i agree with the view of the stock. even though as you know this is my absolute favorite thing to prepare. and can you ever really get enough crumbled bacon? >> i feel like they are making unsafe assumptions. they think it should have a strong fall and holiday season. i get all that the paper, the cards. paper that i don't have from pop's store. get everything for the holidays at costco. these guys like the accelerated store opening. 602 stores wwide they
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are adding more this year with more than half in the higher margin international markets. they like that costco which has more than 66 million members boosted it's membership fees and that is just profit. bank of america assumes that the average ticket price will increa increase. these guys have been hammered by the large screen tv price wars. i think it is a risky assumption given what bank of america is doing. and have you seen the prices of 61 inch screens. they are being football left and right. or you go with -- i've been shopping. for the most part i agree with the picture that bank of america
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paints with cost co. the problem wiis with the stock. if bank of america is right and they are going to rally 10.5%. and that is not enough upside for this guy. the analyst said while this guy has been wrong. the guy has raised his price from 88 to 94. he tells you not to buy it but he tells you not to buy it. they think the rally will fizzle though. they know that they have been reinvesting for several quarters. that is something that the former ceo told us. he said we got to take price cuts or keep pricing down to satisfy the customer because the customer is right. he points out that this is cog
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that the customer has done. that means the company's margins probably won't be as strong as the customer is expecting and this stock could be hammered. the real clincher is what bernstein has to say about valuation. this is what worries me. he points out that costco's stock. listen to this. the moment that they trade at 22 times earnings and it has a 22 prnt long-term earnings. if anything goes wrong. it will shrink for rapidly. up here, price matters. the stock is priced for
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perinfection or it will indeed go lower. i bet the stock will go down because it has run so much. in my view, all right play with an open hand. sold cost co at $92.55 back at the end of june. if it goes below 90, then and only then will the trust think about building a new position. you can argue that the trust got out too soon. i care too much about valuation to attempt to make those risky points. i'm going to make a pass on those. everyone tends to be lay iars. i think the bull issish bank of america is right about the company but bernstein is right about the stock. this one is too expensive.
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wait for a pull back. i always take the main lobster dip and take a pass on the stock. mike in wisconsin, mike? >> yes, booyah, b fan love the show. >> what is going on out there? >> we are still getting over the seattle cough. >> i would never get over that. i carry a grudge like that. i tell my kids to be angry. go ahead. >> my stock is jc penney. given the recent news, the store up 20%. you know, that is like, do you know what that stock is? it is a replacement ref stock. i'm not going to put any money on replacement ref stock. >> let's go to alabama.
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>> booyah. i have a question about lulu lemon. when is a good selling point. >> today it went up because there was a noted money managers who did not say anything negative about it. i think they should have bought lululemon, it is a great growth to story. i saw the stock on the move today. i said it goes higher stick. the bulls are right about cost co the company. but the bernstein bears are going to be right about costco the stock. stay with cramer. >> coming up. seller's market. housing has been on the mend and stocks have been soaring.
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tonight, cramer turns to see if they are build to go higher or if their foundation is built to go stable. bob, these projections... they're... optimistic. productivity up, costs down, time to market reduced... those are good things. upstairs, they will see fantasy. not fantasy... logistics. ups came in, analyzed our supply chain, inventory systems... ups? ups. not fantasy? who would have thought? i did. we did, bob. we did. got it.
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it is time for the lightening round. and then the lightening round is over. are you ready? start with robert in florida robert? >> high jimmy want to give you a florida state booyah. >> go noles, what's up? >> my stock is 3-d systems. >> i got to do more work on this. this has been a hot stock but it looks like it is rolling over. let me do a technical and historical analysis before i comment on it. >> let's go to john. >> booyah this is john from the windy city. >> congratulations on last
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night's victory. >> ticker symbol nok? >> it is not okay to own that one n-o-k. we are going to skip nokia. how about mark in maryland? >> jim, a big thank you booyah from my wife. my question is regard iing gourdman's is this an excellent buying opportunity? >> again, i know this sounds like i'm punting a lot. i don't know how the last three months, but i have to do my homework on this one. i'm not ready and up to speed. tom in california. >> two israeli communication stocks. partner and sell. ptnr and cel.
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>> i have been saying cel, please do not touch it. it is way too risky for me. billy in pennsylvania. >> yes, jim, booyah from the country who hosts your eagles on sunday. i bear no malice and how can i make money with you? >> okay. my question, pay big dividends 10%. wind screen. >> we had them on. i was not convinced that this company was going to do very well. i'm going to say no. i'm going to rm eeen in califor. >> first time caller. rly? >> american capitol agency is the one i want to own. >> and that is the conclusion of the lightening round.
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in dividends we trust. even if the economy gets stronger and you expect the feds to start tightening. that is why tonight we are checking up on a group of stocks that are renowned for beautiful yields. why? consider the ishares dow jones real estate etf. you buy the whole cohort instead. it is up 12.9%. but in the last few weeks, we have been worried because this has been body slammed. we want to know if this is a garden variety full back. tonight we are going off the charts to figure out if the real estate investment stakes are
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done. he is a brilliant technician and perhaps the most reliable guy i have been dealing with on the charts. you can see that over the last few weeks this thing has been put through the meat grinder. is this a pull back off the recent time or are there signs of something more sinister? there is a developing head and shoulders pattern here. there you go. that is one of the most dreaded topping formations out there. because it could get in their eyes or something. this pattern tends to be stronger when it comes to predicting tops. it has been forming and in order to get something that he doesn't
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consider likely. so you know, not a disaster. even without a head and shoulders shart, this has seen a bunch of bears developing for the last couple of weeks a loan. when you look at the investment trust, it was from the 65/50 level. that was a monumental breakout. and when that happens the old resistance becomes the new flow of support. in this case it flunked the test as soon as it started. it takes us the ceiling and the floor and the floor did not hold. even worse, after the iwire broke down, it failed to recapture that level, but it
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never succeeded. and this time a harder one. after the third day it tried and failed to break back it looked as if the bulls have given up. white flag. it took a big tumble. and this time the iwire tried to reclaim that and it has lead to still one more break down yesterday. this is the money flow. it takes both price and volume into account. buying pressure drives it up and this has been accompanied by the money-flow index. that tells us that in the past it reliefs that pressure before the price can start moving higher again. we are finishing the first over
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sold week today. it has been another whole week of pain. not a sign of the bottom. right now the iyr is approaching a gap area. we don't want it to fall into the gap. and stocks tend it fill in these gaps. which means if the iyir falls through the gap, it is going to the bottom at 61.50 like that. he doesn't think this etf will fall to 60. oh man that is a little more than four points below where it is right now. what about the weekly chart? is this longer term view less grim? collin sees a filmer of hope but also reasons to fear. it is a very long wedge pattern that is dating back over a year. the wedge is holding up.
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it looks to collins like history has been repeating itself. it has another long wedge pattern here. just like now that in the sum p mer of 2011. it is similar to what we are seeing right now and look what happened. it got crushed. momentum indicator, securities come in at 2011 it fell from an over bought position down to normal. look at this. the same thing that happened here is happening here. could it be doing that? i don't know. all would suggest that the real estate investment, they could be due for a serious sell off. probably not as bad as that one but still serious.
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you know totally negative way, the wedge pattern is still holding. if it could hold above the base of the wedge pattern, maybe the massive break down could be avoided. if it doesn't hold, that is more than $8 down. and it is going to cost a lot of people a lot of money. over the past few weeks, don't forget this has been the best formed group. the reach may have to come down further. wait for a lower price or a better looking chart. nobody got hurt by being patient. i'm going with collins. "mad money" is back after the break.
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should we care that google market's capitalization just past the value of microsoft's? but we have to note that the trajectory speaks to older generations. that a younger google does. before i dissect the two writing off microsoft could be a brutal mistake here. the company stole base too much going forward to ignore. because it hasn't gotten back to a turn of the century.
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the problem with microsoft is that it is linked to personal computers and they are no longer a personal growth business. when you buy tech you buy tech for both. now, microsoft has done amazing things. their gaming software is incredible. they cannot be written off. but microsoft suffers from something that is deadly when it comes to the demographic it must open if it is able to stay relevant for the next 25 years. it is not cool. go talk to your kids. talk to people in college. i have never ever heard a kid say i'm stuck with this miserable apple and i want a
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microsoft operating system. it is so exciting now i can junk my mac. people from our generation don't get this at all. they are too old. they are too old. but as this new generation comes to the floor the intell people will die off. and with them will come microsoft. they are not junking the m axe c for the who little packard. as anyone of middle-aged dismisses the value of cool. here is why that is wrong. steve bomber before bill games was viewed as a suit. steve jobs was viewed as bono. you don't want to spend anytime with the microsoft guys and i know steve. i sat next to him at a reunion. but when you read walter isaac
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son's by of fee of jobs. he was a man, and everyone wanted to hang with him because he was the coolest man in the room. meanwhile, google is the logical heir to apple. go google has the momentum you could have on your cell phone and that is why the stock is going higher. the gee fault go to tech name is google. it is the financial equivalent over who is cool. google is and microsoft isn't. which is why google up here is the one to own. stay with cramer. in 15 categories, including best overall car rental. so elevate your next car rental experience with the best.
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